The German chancellor, Angela Merkel, has stepped into the 11th-hour Brexit crisis to urge both sides negotiating in London to move past their red lines to strike a deal, even as France threatened to use its veto.

The significant intervention came as EU sources spoke in increasingly confident terms of an agreement being reached before Monday, with both sides said to be moving to find common ground on the outstanding issues. “Expect news soon,” said one source. “Things are moving.”

Downing Street sources said negotiations would resume on Friday evening, after a late afternoon break, but there would be “no white smoke” before the weekend. Boris Johnson’s spokesman said talks were at “a very difficult point” but the government was working to bridge the gap.

Despite concerns being raised in Paris, The Hague, Copenhagen and Rome about the concessions already offered by the EU’s chief negotiator, Michel Barnier, Merkel’s government said on Friday further compromise should be made if it would secure a trade and security deal.

“For the chancellor, and that hasn’t changed in recent weeks, the willingness to compromise is needed on both sides,” Merkel’s spokesman, Steffen Seibert, said. “If you want to have a deal then both sides need to move towards each other. Everybody has their principles, there are red lines, that’s clear but there’s always room for compromise.”

Sources said both Merkel and the European commission president, Ursula von der Leyen, had shown “absolute determination” to push the deal over the line despite the concerns of some at the detail. “The member states will take their time when they get the deal through,” said one diplomat. “Agreement at negotiator level doesn’t necessarily mean it is deal”.

Angela Merkel leaving a news conference in Berlin
Angela Merkel leaving a news conference in Berlin on Wednesday. Photograph: Reuters

No 10 is keen to secure an agreement in time for legislation implementing the deal to pass through both houses of parliament before Christmas. Government officials acknowledge they may have to ask MPs to sit until 23 December, if a deal comes later than the start of next week.

On Friday, the European council president, Charles Michel, promised the member states they would have sufficient time to scrutinise the terms once settled between the two teams of negotiators. But the former Belgian prime minister said both sides had a responsibility to make the talks work.

He said: “We’ll see in the next two days what the next steps are at this point in the negotiations. It will be up to the commission to take a position, and when the time comes, and the time has not yet come, it’ll be up to the member states to take a position as well. It is really essential to make sure that what we put on the table at the end of the negotiations will be accepted by all the member states.”

Earlier in the day, Clément Beaune, France’s European affairs minister and a close ally of president Emmanuel Macron, had said his country could act unilaterally if the terms were not right.

“I think it’s also the case for our partners that if there were a deal that isn’t good, which in our evaluation doesn’t correspond to those interests, we will oppose it,” Beaune said. “Yes, each country has a veto, so it’s possible. France like all its partners has the means of a veto. We must make our own evaluation of course of this deal, that’s normal. We owe that to the French people, we owe it to our fishermen, and to other economic sectors.

“I want to believe we will have a good deal, but to get a good deal you know it’s better to be frank, and to say our interests. We have been very clear, sometimes the Brits a little less so, about our interests.”

A No 10 spokesman reiterated the UK government’s insistence on protecting “sovereignty”. “These are live negotiations which are ongoing. There are still some issues to overcome. Time is in very short supply, and we’re at a very difficult point in the talks,” the spokesman said. “What is certain is that we will not be able to agree a deal that doesn’t represent our fundamental principles on sovereignty and taking back control.”

He added: “That includes controlling our borders, deciding on a robust and principled subsidy control system, and controlling our fishing waters.”

The details of any deal will be scrutinised closely by Brexiter MPs, whose support carried Johnson into Downing Street. They say they will not wave through an agreement that cedes too much regulatory control to Brussels.

A senior Tory minister in the European Research Group said: “I think it’s more likely than not that we will have a deal by Monday. I’m cautiously optimistic about it, subject to the detail – the devil is in the detail.

“As far as fisheries are concerned, everybody would have to be satisfied that the fishing industry was happy with the deal. On state subsidies, anything that left us permanently tied to EU regulation would not be acceptable. But I have every confidence the British negotiators are aware of that and are approaching the talks with that in mind.”

With Labour likely to back an agreement, and Johnson sitting on a comfortable majority, it is almost certain to pass, even in the face of a significant Tory rebellion.

UK government sources had claimed on Thursday that the negotiations had taken a sudden step backwards after furious French lobbying pushed the EU to make late demands.

The apparent hardening of the EU position was said to have destabilised the protracted talks, peeling back progress made over the previous 24 hours. The talks, being held in the basement of the UK’s business department, went on beyond 11pm on Thursday. Both sides believe Sunday evening or Monday morning is the deadline for the year-long negotiation.

Beaune said his government was closely monitoring developments in London and would scrutinise any agreement. He said: “This [no deal] risk exists. We mustn’t hide it because there are businesses, our fishermen, citizens who need to know and so we must prepare for a risk of no deal. That’s to say on 31 December there will be no more free circulation, and free access to the UK market and vice versa.

“But it’s not what we want and the negotiations are still going on with Michel Barnier, who is in London at the moment. I still hope we can have a deal but I also say to our fishermen, to our producers, to our citizens, that we won’t accept a bad deal.”

The talks remain focused on the level of access EU fishing boats will be given to British waters at the end of the year and the so-called level playing field provisions. The EU is seeking assurances that the UK will not be able to distort trade through subsidies or by undercutting on environmental, labour and social standards.

UK sources claimed the EU had started pushing for further and harder assurances over the role of a domestic regulator of subsidies, or state aid, after the transition period, a claim dismissed outright by Brussels.

“We don’t see any breakdown or real trouble beyond the already slow grind of this negotiation,” one EU source said on Friday. “It centres on domestic enforcement of state aid regulations be they ex ante [prior] or ex post [after a subsidy is granted].”

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